NASDAQ Futures Gap Down into Wednesday

NASDAQ futures are coming into Wednesday with a gap down after an overnight session featuring normal range and volume.  Price worked slightly lower overnight, ultimately balancing inside of the Tuesday range during extended trade.  At 8:30am Durable Goods orders came out better than expected.

Also on the economic docket today we have house price index at 9am, new home sales at 10am, crude oil at 10:30am, a 2-year note auction at 11:30am, and a 5-year note auction at 1pm.

Yesterday we printed a normal variation up.  The day began with a gap up that was quickly faded.  After closing the gap and briefly probing below the overnight low, a strong bid stepped in, reversed all the morning selling, and two way trade ensued.

Heading into today my primary expectation is for buyers to work into the overnight inventory and close the gap up to 6079.  From here we continue higher, up through overnight high 6081.  Look for sellers up at 6098 and two way trade to ensue.

Hypo 2 sellers press down through overnight low 606.75 setting up a liquidation down to 6021.25 before two way trade ensues.

Hypo 3 stronger buyers press up to 6119.75 before two way trade ensues.

Levels:

Volume profiles, gaps, and measured moves:

NASDAQ futures are coming into Tuesday gap up after an overnight session featuring normal range and volume.  Price worked higher overnight, sustaining trade inside of the Monday range in balanced trade that broke higher during the morning.

There are a few items on the economic calendar today.  We have Markit putting out manufacturing, service, and composite PMI at 9:45am.  At 11:30am the US Treasury is auctioning off 4-week T-bills.  Then at 1pm they are auctioning off some 2-year notes.

Yesterday we printed a double distribution trend down.  The week began with a gap up that sellers quickly faded.  The selling continued down to 6089, which was the target level of our primary hypo before settling into 2-way trade ahead of lunch.  Then sellers engaged the market again, making new lows and pressing deep into last Thursday’s range.  We closed near the session low.

Heading into today my primary expectation is for sellers to work into the overnight inventory and close the gap down to 6063.75.  From here we continue lower, down through overnight low 6061.50.  This triggers a move down to 6021.25 before two way trade ensues.

Hypo 2 buyers work up through overnight high 6083 and target 6098 before two way trade ensues.

Hypo 3 stronger buyers press up to 6119.75 before two way trade ensues.

Levels:

Volume profiles, gaps, and measured moves:

NASDAQ futures are coming into the last full week of October with a slight gap up after an overnight session featuring normal range and volume.  Price worked sideways overnight, traversing last Friday’s range a few times and briefly exceeding to the upside.

The economic calendar is light today.  The only scheduled event is a 3- and 6-month T-bill auction at 11:30am.

Last week we rallied.  The Dow rallied hard.  The other indices made a bit of progress early in the week, saw a gap and drive lower Thursday morning, then a recovery, and ultimately closed out the week higher.  The last week performance of each major index is shown below:

On Friday the NASDAQ printed a normal variation down.  The day began with a gap up.  After a brief two-way auction price went range extension down.  Buyers defended an attempt back down into the Thursday range and two way trade ensued.

Heading into today my primary expectation is for sellers to work into the overnight inventory and close the gap down to 6110.75.  From here we continue lower, down through overnight low 6106.  Then we continue lower and close the gap down at 6089.25 before two way trade ensues.

Hypo 2 buyers refuse any moves into last Friday’s range and we go take out overnight high 6128.  From here we continue higher and probe record high 6131 before two way trade ensues.

Hypo 3 stronger sellers press down to 6076.25 before two way trade ensues.

Levels:

Volume profiles, gaps, and measured moves:

As the Dow races faster and faster to the upside, the thrill of rapid wealth accumulation has over come the fear of a crash. It is riding the same legendary trajectory as semiconductors or bitcoin—something we will tell stories about for the next 30 years—those of us who had our wits about us enough to participate in this rabid moment.

Perhaps onlookers will discuss it also, from their safe perch—mere observers of the brave few who decided to buy a ticket for the ride.

But all of that is neither here nor there, what we root ourselves in every Sunday, diligently, for 153 consecutive weeks (note: 153 is dividable by three see… 1+5+3=9) we root ourselves in auction theory.  The ONLY THEORY, mind you, that can make some sense of all the madness—the whirling buffoons drunk on bull milk, the scrunched up cynics who hiss nearby—human nature lads.  That is what drives markets in times like these.

In all times, really.

And these immovable foundation stones have been stared at for several hours this morning, and they insist the market is still bullish here.  For at least five more days, and the learning computers inside Exodus, which become smarter by the day, suggest the bulls could keep this sleigh rolling clean through November.

So revel in the madness of it all.  In times some would call uncertain, we are experiencing the greatest phase of capital appreciation most living beings have ever seen.

As always, the good scientists at iBankCoin laboratory will take this flash of exuberance like we would the most boring of markets, one day at a time.

It is our hope, aside from empowering the decisions of our chief trader RAUL SANTOS, that we can demonstrate, live, how one can best navigate the world’s financial markets.

Most distinguished and outstanding members of Exodus Market Intelligence, the 153rd edition of Strategy Session is live. Go forth and read its prophecy.

Greetings lads, floods coming.

And in the meantime any diligent human who has studied the squirrels knows how important it is to gather supplies ahead of the winter.  The winter is when the weak perish and the hearty procreate.

Some humans are much better at gathering supplies than others.  When it seems like not as many dollars are being funneled into the stock market rally, people read that as bearish.  It really does not matter.  There is still enough participation.

It blows my mind when people talk about pensions.  Defined benefits.  They are dead and gone.  A relic from an era of men who could not be held responsible to gather enough supplies before they become useless–enough supplies to last them through their useless years.

Nowadays, you can augment your brief existence here on earth with robots.  This is how you live very old and happy without a pension.  In the old days, they just enslaved people.  Quite evil.

But being a benevolent robot overlord is not evil.  It is natural and healthy and much better than paying money every week into a bastard pension run by some pencil dick in Boston.

Have you guys seen bitcoin by the way?  It is nearly $6,000 fiat American dollars to buy one coin.  I love the “governments are gunna shut them coins down” argument, because it truly is the most moronic.  It demonstrates a complete lack of understanding.  Bitcoin is decentralized.  There is nothing to shut down.  It is, indestructible. Brilliant.

See you fuckers at $100k.

Moving on.  The models inside Exodus caught a 2% rally across the board recently.  During our one-on-one phone calls I always tell members, “If you can get out of your own way mentally, and just trade the 36-month hybrid overbought/oversold cycles, you will pay for your membership 10x over.”  I hope they listen.  Look at this quantitative excellence:

As for next week, the model I build, which seeks to predict (somewhat) the nature of the auction over the next five trading days, it is looking for a calm ascent higher.  Nothing robust.  This was the same call last week.  Will it be dead-eye dick accurate two weeks in a row?

As always, TBD.

One caveat, a feather in the proverbial bearcap, if you will, comes in the form of last week’s sector rotations which skewed towards Utilities and Staples.  In fact, my best performing stock so far in Q4 is $CWT.  These rotations speak of risk aversion:

I will be in the bush this upcoming week.  I have been in the city for far too long.  I am beginning to consider making to kill some of the locals townsfolk out of sheer boredom.  Therefore, as soon as I complete this letter to you, the loyal reader, I am hopping in the transient express and making my way to the north shore of Lake Superior.  Lake Superior is the largest freshwater lake by area in the world.  To think, it is only 5 hours away and I have hardly explored its upper regions…shameful.

NO LONGER.

In summary, volume on exchanges is sufficient to support a rally.  Pensions are dead.  401ks robo feed fiat dollars into the S&P 500.  Robot over-lording is good, tricking hippies into building you a farm for free is bad.  If you are missing out on the bitcoin rally, shame on you.  Tell your kids you are missing out on the greatest video game rally ever.  Models are bullish.

And I will be deep in nature, so the townsfolk are safe.

Exodus members: the 152nd edition of Strategy Session is live, go check it out!

NASDAQ futures are coming into Thursday with a gap down after an overnight session featuring normal range and volume.  Price worked lower overnight, trading down to to midpoint of Wednesday as we head into cash open.  At 8:30am Initial/Continuing jobless claims came out better than expected.

Also on the economic docket today we have crude oil inventory at 10:30am and a 30-year bond auction at 1pm.

Yesterday we printed a normal variation up.  The day began flat and after a slow opening auction we broke higher and worked back up near record highs.  We did not, however, take out record highs.

Heading into today my primary expectation is for buyers to work into the overnight inventory and close the gap up to 6082.25.  From there we continue higher, up through overnight high 6084.25.  Look for sellers up at the measured move target of 6133.50 and two way trade to ensue.

Hypo 2 sellers press down through overnight low 6071.50.  Look for buyers ahead of 6057.75 and two way trade to ensue.

Hypo 3 some kind of liquidation triggers, pressing price down to 6021.50 before two way trade ensues.

Levels:

Volume profiles, gaps, and measured moves:

Since none of you care about the NASDAQ, or how to navigate its waves and gyrations, maybe you will pay attention if we talk about how Tesla is trading.

All eyes are on Tesla because the third quarter is over, and they only produced 260 handmade Model 3 cars.  Also there are lurid rumors Elon may be leave his CEO post soon, perhaps to spend more time launching big fucking rockets into space.

Tuesday morning bulls caught an upgrade from Morgan Stanley, who issued a modest price target raise to $379 from $317.

Let us now take notice of what all the above information is.  It is all news bits.  The first came from Tesla, the rumor is internet chatter, and the upgrade is from a firm that manages other people’s wealth.

How do you draw an objective decision from all of it?  Do you feel confident taking action based off of words from other people?

You can go find this out on your own if you want, or you can just sit down and grab a pencil—trades based off of soundbites will not be consistent, and eventually you will lose all your money.

What we need is an objective way to assess the behavior of Tesla that is not static.  We need it to change as events continue to unfold.

Enter auction theory.

Every real transaction must go through the exchange, in the case of Tesla that exchange is the NASDAQ.  When the orders occur time, price, quantity of shares, and whether the order occurred at the bid or the offer.

We use this information to build charts.  Most charts are time-based, and the two charts displayed below are time-based.  The first is a daily chart.  It also is noted with all relevant auction notes, including a method of scoring the auction:

The second chart is hourly.  It is mainly to see where the nearby magnets are.  Powerful ‘magnets’ are areas that are likely to attract price.  These can be seen as zones of heavy volume.  Auction theory expects these areas of heavy volume to be revisited.  Old open gaps are another popular magnet.  The nearest magnet is just a touch above Tuesday’s close price.  It is an open gap left behind last Friday:

At this point the assessment is clear and objective.  The model score is 2.7 which is medium bear.  It is barely medium bear.  From 2.8-3.2 we are neutral.

Since we are bearish we have some simple levels that will tell us new information about whether we are wrong.  If sellers do not defend last Friday’s open gap at 356.86 if/when we close it, we might be wrong.  If sellers do not defend our key Fibonacci retracement around 367.40 then we are wrong.

If price goes back down and probes below the prior swing low 335.64 then we might be right, and a quick trip down to the open gap at 326.25 is in order.  Then we reassess the auction.  Maybe next we test back to the heavy volume zone at 312.14, and so on.

The auction creates a continuous dialogue that is completely separated from the noise of the world.  It you can focus on the auction only, you will find yourself in a better position to consistently execute.

Your job as a trader is to tell the story of the auction and nothing more.  This aids your actions which are calculated and mindful.  No hearsay, just sturdy logic.

This is trading.  It can seem detached from humanity.  I can assure you it is not.

NASDAQ futures are coming into Tuesday gap up after an overnight session featuring normal range and volume.  Price worked higher overnight, nearly nonstop, but slowly.

At 11:30am today the US Treasure is auctioning off a variety of short-term debt including 4- and 52-week bills and 3- and 6-month bills.  There are no other major economic events today.

Yesterday we printed a normal variation down.  Trade was slow on Columbus ‘the rapist’ day, with the week beginning gap up.  After a brief probe above the globex (record) high we worked lower and close the overnight gap, eventually going a bit lower later in the afternoon.

Heading into today my primary expectation is for buyers to work higher, up through overnight high 6081 and continue higher to the measured move target at 6113.50 before two way trade ensues.

Hypo 2 sellers press into overnight inventory and close the gap down to 6069.50.  From here they continue lower, down through overnight low 6061.  Look for buyers down at 6053.75 before two way trade ensues.

Hypo 3 stronger sellers press up down to 6048.50 before two way trade ensues.

Levels:

Volume profiles, gaps, and measured moves:

Give me a  farmer over a banker any day.  No days off when it’s you verses nature.

NASDAQ futures are beginning the week gap up after an overnight session featuring normal range and volume.  Price worked higher in a balanced and methodical manner, achieving new record highs.

There are no economic events scheduled for today because it is Columbus day and the banks and government outfits are closed in celebration of European colonialism—a spreading around the globe of humans who lived in close proximity to livestock and therefore developed immunity to animal borne viruses.  If you think about it, those people living in North Carolina, which has more pigs than humans, will likely be the humans ruling the world.  Since they are the first to contract swine flu and whatnot, from those delicious cesspools they live around.

Last week the markets rallied.  They rallied all week long.  By midweek the Russell was marking time, but with a slight upward drift.  Below the last week performance of each major index is listed:

On Friday, the NASDAQ printed a normal variation up.  The day began with a gap down and buyers pressing into the overnight inventory.  After some two-way-auctioning, the market went range extension up and eventually closed near high-of-day.

Heading into today my primary expectation is for sellers to work into the overnight inventory and close the gap down to 6064.50 before two way lazy trade ensues.

Hypo 2 gap-and-go higher, open air, take out overnight high 6082.50 before two way trade ensues.

Hypo 3 stronger buyers press up to the measured move target at 6113.50.

Levels:

Volume profiles, gaps, and measured moves:

The darkness has been making its presence known throughout several of the dystopian haunts of the city as we press into October.  Every day we look at the calendar in dismay because the weather has remained downright hot.  Nevertheless the ghoulish spirits that tend to show up this time of year are still up to their devious shenanigans.

Shenanigans.

And then we have this Friday, the 13th to deal with which drives superstitious people bananas.

Bananas.

Funny story—I followed a great numerology account over on the Twitter.  The guy was good, I mean he really drank the koolaid and believed he could see into the future with his number voodoo.  I can respect that, especially if it can be measured, his calls.  Because that which is measured is managed.  But the guy would not stop going on these hardcore alt-right rants at night.  Like the whole ‘false flag’ paranoia, and evil Soros this and meddling Jews that.  It totally ruined everything he had going on.  I had to un-follow the knucklehead.

Pro tip: if you ever feel the need to unfollow someone on social media, pen an extremely arrogant note to the person explaining why you are un-following them.  It will make you feel like a real jackass.

Moving on, the kind and trusting scientists at iBankCoin laboratory wasted no time this morning calibrating all the instruments inside Exodus to ensure an accurate reading.  And it turns out we are bullish, just like last week.  We do not expect any rambunctious rally.  Instead we are looking for more of a calm drift, perhaps with a slight upward bias.

Stock pickers heaven.  Maybe you go inside of the Pelican Room and see what those guys are knocking around.  Or just check out the momentum screen inside Exodus around 10:45am.

So we are not caring so much about Friday the 13th.  As scientists, we do enjoy seeing people take action based off of superstitions.  It brings us joy to see the fickle nature of our fellow sapiens.

The play might just be to turn the monitors off and take a heaping dose of nature.

Anyhow, those are our findings and fun anecdotes for Sunday.

Trade accordingly.

Exodus members, the 151st edition of Strategy Session is live.  Go check it out!